June 10, 2016 / 2:12 PM / 2 years ago

UPDATE 3-Westlake Chemical wins Axiall pursuit with raised $2.33 bln bid

* Offers $33 per share in cash

* South Korea’s Lotte Chemical withdraws bid

* Axiall shares rise 26 pct (Adds Lotte Chemical’s withdrawal in paragraphs 4-6, updates share prices)

By Amrutha Gayathri

June 10 (Reuters) - Westlake Chemical Corp has reached a deal to buy chemical producer Axiall Corp for $2.33 billion after a six-month pursuit that included multiple bids and a rival offer from South Korea’s Lotte Chemical Corp .

Atlanta-based Axiall shares gained 26 percent to close at $32.56 on Friday, slightly below the new offer price of $33 per share in cash. Westlake shares rose 3 percent to $46.40.

Axiall had earlier rebuffed Westlake, saying that the Houston-based petrochemical maker was trying to acquire its vinyls assets cheap.

Lotte Chemical said in a statement late on Friday in Seoul that it withdrew its bid.

“Considering the difficult situation Lotte has faced in Korea recently and heated competition, we have decided to withdraw from the buyout competition,” it said.

On Friday morning, South Korean prosecutors raided the offices of the Lotte Group, the country’s fifth-largest conglomerate, and several affiliates in what three people with direct knowledge of the matter said were part of an investigation into a possible slush fund.

After its last $23.35 per share cash-and-stock offer in March was rejected, Westlake put up its board nominees in an attempt to replace Axiall’s entire board.

The deal has an enterprise value of about $3.8 billion, including debt and other liabilities, Westlake said on Friday.

The combined company will be North America’s third-largest producer of chlor-alkali and the No.2 producer of polyvinyl chloride. Chlor-alkali is used to make chlorine and caustic soda, while polyvinyl chloride is a form of plastic used in a wide range of products from pipes to packaging.

The acquisition will add to Westlake’s earnings from the first year after it closes, the company said. The deal, which is expected to close in the fourth quarter, is seen saving about $100 million in costs.

The combined company is estimated to have proforma revenue of $7.6 billion for the 12 months that ended in the first quarter.

Lotte Chemical said on Tuesday that it had made an offer for Axiall, but the company did not provide further details. The Seoul-based company already has a joint venture with Axiall, through which it plans to produce ethylene in the United States.

Westlake said on Friday it was looking forward to working with Lotte Chemical through the joint venture and that it had agreed to withdraw its nominees for Axiall’s board.

Deutsche Bank and Goldman Sachs & Co are Westlake’s financial advisers for the deal and Cleary Gottlieb Steen & Hamilton LLP is its legal counsel.

Morgan Stanley & Co and Barclays are Axiall’s financial advisers and Jones Day is its legal adviser. Weil, Gotshal & Manges LLP is providing legal counsel to Axiall’s board. (Reporting by Amrutha Gayathri in Bengaluru; Additional reporting by Tony Munroe in Seoul; Editing by Kirti Pandey and Muralikumar Anantharaman)

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